Asia's coffee sales slow due to hoarding, tighter supply

Asia's coffee sales slowed this week due to hoarding, tighter supply in Vietnam and as Indonesia's harvest is yet to touch its peak, traders said on Thursday. Slowing sales in Vietnam, the world's largest robusta producer, along with a drop in coffee exports from Indonesia's main growing area could lend support to robusta futures, which have eased so far this month.
Vietnam and Indonesia produce nearly 30 percent of global coffee output. ICE September robusta settled down 0.3 percent from the previous day at $1,646 per tonne on Wednesday, due in part to a weaker dollar. The contract has dropped 1.3 percent from May 31.
Premiums of Vietnamese robusta grade 2, 5 percent black and broken widened to $35-$45 a tonne to the September contract, from premiums of $20-$30 last Thursday. Futures and differentials often move in opposite directions. Vietnamese robusta grade 1, screen 16, similar to Sumatran coffee, was offered at premiums of $80-$90 a tonne to ICE September, up from premiums of $65-$75 a week ago. "We have not seen any coffee outflows in the past 10 days," said a trader in Daklak, Vietnam's top growing province. "Exporters dare not sell actively as they fear they would not be able to secure coffee on domestic markets," he said, noting that speculators have resumed hoarding, awaiting higher prices.
Vietnam exported 1.16 million tonnes (19.33 million 60-kg bags) of coffee between October 2015 and last month, the first eight months of the ongoing 2015/2016 season, up 19 percent from a year ago, based on government data. The country is forecast to ship 26.67 million bags of green beans in the whole of 2015/2016, up 35 percent from the previous season, according to USDA projections. In Indonesia, the harvest has yet to pick up pace and most of the newly-picked cherries have been bought by domestic roasters, traders said.
Premiums of beans grade 4, 80 defects rose to $140-$150 a tonne to ICE September, from $100-$140 last Thursday. "Farmers don't want to sell at a cheap price, they are holding until prices are better, although the demand is not that great," an exporter said. The harvest is expected to peak from July. Coffee exports from Sumatra in April-May, the first two months of Indonesia's 2016/2017 crop year, plunged 75 percent from a year ago to 9,423 tonnes, mainly due to declining stocks ahead of the new harvest, based on government data.